The Housing Bubble

A report from the News Gazette in Illinois. “A Rhode Island developer is building a seven-story, 538-bed luxury apartment building near Campustown that it hopes to open in the summer of 2019. Meanwhile, local developers with student housing projects nearby are worried the market is oversaturated, with Gilbane Development Co.’s project just the latest in a long line of others like it. ‘The market’s overbuilt. Anybody with half a brain can see that, so you got to pick and choose your spaces really carefully,’ said Dan Hamelberg, developer of the Midtown Plaza, which has 104 units.”

“Several apartment buildings have been built in Campustown and Midtown over the last few years, with more on the way. ‘Local developers and local banks know what’s going on,’ he said. ‘The time has come for people who are outside of our market to realize that we have a vacancy rate, and it will go higher if you come in with a couple hundred more units.’”

From KGUN 9 in Arizona. “TUCSON. - Tall towers have taken root all around the University, and still more are sprouting. It’s enrollment growth and the appeal of living close. Besides 23 on-campus dorms, UA refers students to about 30 off-campus complexes with about eleven thousand beds. By Fall 2019, the housing office expects new construction to add close to 13 hundred beds, in complexes connected to the U of A program. Construction in unaffiliated complexes is expected to add even more.”

“The simple explanation for the building boom is the boom in UA student enrollment but landlords and business analysts tell us there’s more to it than that. Because costs are generally lower in Tucson a company that builds here might manage a six percent profit margin. Somewhere else it might be just two percent. We’ve heard disagreement over how long the boom will keep booming. Some landlords think by Fall 2019 supply and demand will fall into balance or there could be a surplus of space.”

From the Denver Post in Colorado. “When Denver Mayor Michael Hancock underlined the urgency of the city’s housing affordability crisis in a speech last summer, he declared: ‘Many residents need an affordable option today, not a year from now.’ But that’s how long it will end up taking to launch the potentially innovative initiative Hancock announced with those words in July 2017. The plan then was to use taxpayer money to ‘buy down’ the rents of vacant market-rate apartments for 400 low- and middle-income households at risk of being priced out of Denver, with some employers kicking in money to help house their employees.”

“For employers and Hancock, the idea is to put empty apartments within financial reach for workers at risk of being priced out of Denver, including teachers, police officers, health care workers and others who can’t afford the city’s glut of gleaming new apartments. The city already has collected interest in participating from the owners and managers of hundreds of vacant apartments (as well as some single-family homes) in about 40 locations across the city. Not all were built recently.”

From the Mercury News in California. “For Bay Area renters struggling to afford apartments that keep getting more expensive, the latest numbers could seem too good to be true — the region’s runaway rent prices finally may be starting to level off. San Jose is looking at the slowest start to the summer rental season in years. Rents in San Francisco are flat-lining. And Oakland saw a minuscule increase in rent prices last month, according to a new study by RentCafe, which found the Bay Area is part of a nation-wide trend.”

“John Protopappas, CEO of Madison Park Financial Corporation, predicts this is the start of a major slowdown in the Bay Area’s rental market. It’s all about supply and demand, he said. In Oakland alone 7,000 housing units are under construction, and as those finished units flood the market, Protopappas expects the city’s rents to drop 20 or 30 percent in the next two or three years. ‘It’s going to become a renter’s market instead of a landlord’s market,’ he said. ‘It’s going to be a renter’s market for a long time.’”

From the New Orleans Advocate in Louisiana. “Retail growth in Mid-City and the rising popularity of the linear park that runs through it have prompted a surge in residential development beyond anything the neighborhood has seen in decades, according to local real estate analysts. Owners of a $65 million apartment complex that is under construction and an upscale townhouse project that’s going up a block away say they are tapping into rising demand for new types of housing.”

“Around the corner, 37 HUNDRED, a $8 million townhouse project will start around $500,000, according to VPG owner Michael Merideth, who said he has pre-sold six of the units. Though rapid construction of new apartments and condominiums may have some worried about the city becoming ‘over built’ with residential units, Kevin Hilbert, a local real estate appraiser and consultant said he has no such concerns. His analysis shows that New Orleans currently is absorbing, or filling, about 30 units a month, a rate he says can easily consume the inventory that’s now under construction or due to begin soon.”

The Pacific Business News in Hawaii. “Rents for two-bedroom apartments in Honolulu have significantly declined over the past year, but still rank among the highest in the nation, according to Apartment List and Zumper. Honolulu is ranked 11th for the highest rents among the 100 cities surveyed by Zumper, which found the median rent for a two-bedroom apartment dropped 8.3 percent from a year ago to $2,200 per month.”

From All Over Albany in New York. “Sometimes during episodes of Exciting Tales of the Albany Planning Board and related whatnot, we refer to the apartment building boomlet that’s been going in Albany and around the Capital Region. There were more multi-family units permitted in 2015 and 2016 than single-family units, which hadn’t happened going back as far as 1980. In 2017 single-family edged ahead again, but only with 51 percent of the overall units.”

“Municipalities in Saratoga and Albany counties have both issued the most number of building permits for housing units — by far — going back to 1980. That’s been especially true in the 2010s — thanks mostly to Saratoga County. But Schenectady County has been picking things up a bit the last three years, adding a bunch of multi-family units in Schenectady (395), Rotterdam (269), Niskayuna (187). Of course, Halfmoon has been the fastest growing municipality by percentage locally the last few years, and was tops in the state last year.”

“It’s also notable that even though the top 5 include lots of suburban areas, the municipalities have been adding significant amounts of multi-family units, which is maybe a little surprising (except in the case of Saratoga Springs). It’s interesting that Albany has added more than 1,000 new residential units over the last decade, yet the Census Bureau estimates that the city’s population is relatively flat since 2010 and has even been declining since 2013.”

From the Kitsap Sun in Washington. “A long-planned apartment development near Evergreen-Rotary Park is back on the market after its owner defaulted on the property’s loan. Evergreen Pointe, a two-building complex with more than 100 residential units and a ground floor of commercial spaces, was conceived a decade ago. The project had cleared nearly all regulatory requirements, but building has yet to occur. Clearview Sheldon, LLC, its owner since 2014, owed $2.16 million on the loan, according to records from the Kitsap County Assessor’s Office.”

“It was recently auctioned off for $2.3 million. Trish Williams, a managing partner for Clearview Sheldon, did not return a request for comment. The project’s new owner is familiar: Pyatt Broadmark of Seattle, Clearview Sheldon’s money lender on the property itself. ‘It’s unfortunate. We still think it’s a wonderful project,” Jeff Pyatt, its president, said of the foreclosure. ‘It’s a beautiful site.’”

“Clearview Sheldon purchased the land from Park Place Development of Bellevue, in 2014. The LLC demolished some aging homes to clear the way for what was then a $12.8 million upscale apartment project. Its new property listing advertises ‘great value at $30k a door for a ‘fully permitted site!!’ ‘With the passing of the Foot Ferry which makes an easy commute from Bremerton to Seattle,’ the listing reads. ‘Amazing Mountain and water view, tremendous demand for new apartments in the area.’”